The discussion about 'who deserves a spot at a prestigious university x' misses the issue. Acceptance at one of these universities is not based on who is the most intelligent, hardworking, or accomplished. These universities, just like any other institutions, have their own goals and agenda. They accept you not because you deserve it or you have earned it, but because accepting you promotes the kind of ideals that these institutions espouse (e.g. money, but could also be racial diversity). Inferring someone's intelligence based on their university, therefore, is highly unreliable at best.
The question that always occurs to me when these kinds of discussions come up is why there is such a huge disparity between educational institutions in this country in the first place. If schools were funded to meet a certain level of performance, instead of based on who was attending or on past performance - like the military is funded - maybe that would be a step in the right direction.
Couple of reasons.. class sizes, access to cutting edge technology and research and professors. Undergrad is probably more uniform except for some degree requirements etc... at a smaller school you may get more hand holding or at least a concerned advisor. At a bigger school that may be impossible. Not to mention your peer group.
